Amazon paid no corporate tax in Europe last year despite record sales income

nanoguy

Posts: 743   +12
Staff member
The big picture: Amazon's business is booming worldwide amid the fast adoption of online retail, so it shouldn't be a surprise that its tax behavior is yet again under the lens of regulators in Europe and the US -- its biggest markets. The company has been using various methods to reduce or altogether avoid paying its fair share, but that may prove increasingly difficult soon.

Last month, Amazon reported more than $8 billion in profit for the first three months of 2021, tripling its profits year over year. It's a financial image that is in stark contrast to that of many other businesses and industries, which have suffered or even succumbed under the pressure of lockdowns and rapid changes in consumer habits over the past twelve months.

The results have impressed shareholders and public investors, but the European Commission isn't content with how companies like Amazon avoid corporate taxation through various methods. To that end, regulators are readying new tax proposals to be announced in the coming weeks and intended to prevent fraud and tax avoidance.

In 2017, the Commission found that Luxembourg had offered Amazon no less than €250 million (a little over $277 million at the time) in tax advantages between May 2006 and June 2014. it found this incentive unfair as it effectively allowed three-quarters of Amazon's income for that period to go untaxed. The EU took the case to court, but a definitive ruling on the matter has yet to be reached.

However, in the context of new corporate filings in Luxembourg, public scrutiny on the company's tax behavior is set to reach new levels. After enjoying record sales income of over €44 billion in 2020 ($52.9 billion) across its operations in Europe, the retail giant paid no corporate tax. It got this break by shifting the money through its Amazon EU Sarl holding in Luxembourg, where it reported a €1.2 billion ($1.44 billion) loss. Amazon was even granted €56 million ($67.3 million) in tax credits it can use to lower future tax bills whenever it turns a profit.

In total, Amazon EU Sarl now has over €2.7 billion in accumulated losses it can use to offset any future tax burden. Furthermore, considering the Luxembourg holding has 5,262 employees, Amazon has made revenues of €8.4 million ($9.85 million) for each one of them for the 2020 fiscal year.

The retail giant says that low margins and significant investments contributed to the 2020 figures. A spokesperson told The Guardian that "corporate tax is based on profits, not revenues." The rep noted the company has invested "well over €78 billion in Europe since 2010, and much of that investment is in infrastructure that creates many thousands of new jobs, generates significant local tax revenue, and supports small European firms."

Meanwhile, the OECD is using the pandemic as a catalyst for international tax reform to prevent a tax-driven trade war. In the US, President Joe Biden blasted Amazon and 90 other companies for not paying federal taxes and promised to change that with the announcement of a $1.8 trillion plan to improve the country's social safety net. Not all American companies agree with an increase in corporate taxation. However, Amazon is among the notable exceptions, mainly because it would have little impact on its bottom line while also funding infrastructure projects that would open new opportunities for its business.

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NicktheWVAHick

Posts: 259   +323
And an untold number of US citizens paid 0 income taxes this year. And an untold number of restaurant owners in cash-only businesses paid 0 income tax on billions in laundered revenue. And an untold number of corrupt US citizens evaded paying any taxes this year because the risk of getting caught is near zero. So what else is new?
 

Austinturner

Posts: 135   +135
Amazon gets a lot of flack for their taxes, but they are making huge capital investments rather than returning cash to shareholders or keeping it in tax havens. Those investments reduce their taxable income for several years and are arguably a good thing.

Amazon does some bad stuff, but making lots of investments is a lot better than hoarding cash in Ireland etc.
 

Theinsanegamer

Posts: 2,400   +3,484
See if, politicians cared AT ALL about "fairness" and "funding", they'd simply start closing the loopholes that businesses and people use to get around paying taxes. You'd likely be able to lower the effective tax rate for everyone, significantly, and still come out ahead considering how widespread legal tax dodging is. Simplify the system on top of it and save on the massive beuracracy needed to run the modern tax system on top of it.

But much like enviromentalists and nuclear power, it's about having control, not about actually fixing problems.
 

psycros

Posts: 3,407   +3,910
See if, politicians cared AT ALL about "fairness" and "funding", they'd simply start closing the loopholes that businesses and people use to get around paying taxes. You'd likely be able to lower the effective tax rate for everyone, significantly, and still come out ahead considering how widespread legal tax dodging is. Simplify the system on top of it and save on the massive beuracracy needed to run the modern tax system on top of it.

But much like enviromentalists and nuclear power, it's about having control, not about actually fixing problems.

Its also about lawmakers getting wealthy from the kickbacks those big corporations give them.
 

amghwk

Posts: 1,015   +926
There's no way a company can get away not paying taxes while able to tell it's shareholders the profit gained, without giving kickbacks to lawmakers. Why is this news not surprising? The rich always get richer, unless they spend mindlessly.
 

Ravey

Posts: 286   +121
I feel like siding with Amazon on this one. One of it's subsidiary companies is drowning in it's own debt so Amazon as a parent company is injecting cash into the business to keep it floating. Which in the process provides tax benefits.

You could only call it tax avoidence if you can prove that Amazon is intentionally allowing a company to make a massive loss in order to qualify for tax benefits. I'm guessing that is what Europe is trying to figure out. Or not? Maybe they will just start saying that every individual company, subsidary or not, has to pay its own fair share of tax.
 

Hollow

Posts: 32   +17
Amazon gets a lot of flack for their taxes, but they are making huge capital investments rather than returning cash to shareholders or keeping it in tax havens. Those investments reduce their taxable income for several years and are arguably a good thing.

Amazon does some bad stuff, but making lots of investments is a lot better than hoarding cash in Ireland etc.

Abusing reinvestment to not pay taxes is not good either, reinvestment is good in general but results in the state not getting anything if everyone does the same.
 

fl21289

Posts: 208   +241
Don't care if they paid taxes or not. Regardless, they creating millions of jobs by opening more centers around the world. Just continue to get me my item within 1-2 days and we call it even.
 

wiyosaya

Posts: 5,786   +3,996
See if, politicians cared AT ALL about "fairness" and "funding", they'd simply start closing the loopholes that businesses and people use to get around paying taxes. You'd likely be able to lower the effective tax rate for everyone, significantly, and still come out ahead considering how widespread legal tax dodging is. Simplify the system on top of it and save on the massive beuracracy needed to run the modern tax system on top of it.

But much like enviromentalists and nuclear power, it's about having control, not about actually fixing problems.
Yes. No one needs to breathe clean air. Clean air is so yesterday. :rolleyes: Its all about control, you know, holding your breath. :rolleyes: Who needs to breathe?? Keep throwing out strawmen. :rolleyes:
 

wiyosaya

Posts: 5,786   +3,996
At least the EU is working on finding ways to prevent the loop holes crApazon is finding.
Don't care if they paid taxes or not. Regardless, they creating millions of jobs by opening more centers around the world. Just continue to get me my item within 1-2 days and we call it even.
And who cares if your 1-2 day delivery time comes with the abuse of those same employees? :rolleyes:
At least he made America great again
🤣 America already had enough grated cheese.
 

TheBigT42

Posts: 524   +429
No Corporation Pays Taxes. They pass the expense to their customers. It is a business expense like paying for Phones, Internet, Power and Water.
 

Avro Arrow

Posts: 1,142   +1,274
TechSpot Elite
I'm actually surprised that Amazon managed to get this past the European Commission to begin with. However, the difference between the European Commission and the US government is that the EC will ALWAYS close a tax loophole that's being exploited while the Republicans and Democrats will argue over it ad nauseum and nothing ends up getting done.

Intel and Microsoft both tried screwing with the EC and they both were given black eyes to remind them that, unlike the USA, the EU is ruled by civic government, not rich multinationals. The EC will have no qualms whatsoever with banning Amazon across the board in the EU. If you ask me, it would serve those bastards right if the EC kicked them out.
 

Avro Arrow

Posts: 1,142   +1,274
TechSpot Elite
And an untold number of US citizens paid 0 income taxes this year. And an untold number of restaurant owners in cash-only businesses paid 0 income tax on billions in laundered revenue. And an untold number of corrupt US citizens evaded paying any taxes this year because the risk of getting caught is near zero. So what else is new?
Two things. Firstly, comparing AMAZON with small restaurants is a false equivalency because the scale isn't even remotely close. Secondly, if a US citizen doesn't pay tax when they're supposed to, the IRS gives them an all-paid vacation to Club Fed if they ever get audited. Amazon didn't do this on the sly, they did it above-board. So again, another false equivalency.

If you think that it's ok for massive corporations to do this, then remember it when you or someone you love gets a life-ending disease (and yes, it WILL happen) and your Insurance Company screws you over (assuming you have insurance). Attitudes like your are why the US healthcare (lack of a) system is in the pathetic state that it is.

People who care about themselves and others understand that if Amazon WAS paying taxes, they'd still be richer than Midas. People who care about themselves and others understand that if Amazon WAS paying taxes, governments would be able to afford NOT to cut things like education and healthcare spending. It could save your life or the life of someone you love.

I refer to posts like yours as "Nihilistic Incel thought' because Incels are nihilistic and don't care about themselves or others.
 

Avro Arrow

Posts: 1,142   +1,274
TechSpot Elite
Yes. No one needs to breathe clean air. Clean air is so yesterday. :rolleyes: Its all about control, you know, holding your breath. :rolleyes: Who needs to breathe?? Keep throwing out strawmen. :rolleyes:
You can always tell the ones who don't realise that the rest of NATO actually has it BETTER than the USA. They assume that, since "The USA is the best country on Earth!" (like hell it is!), everyone else must have it worse than them and be even more pissed off than they are. They really have no clue about life beyond the USA. They're not bad people, they just have never been taught how to look at the world from perspectives that are different from their own.